Twitter's first half-quarter as a public company was both a #dud and a #success.

The microblogging service reported a fourth quarter net loss of $511.47 million, but that included $406 million in stock compensation expenses related to the company's initial public offering in November.

That put a big red number on Twitter's bottom line, and its stock price dipped by as much as 17 percent in after-hours trading following the release of the San Francisco company's first-ever earnings report.

Yet the overall results beat the expectations of Wall Street analysts, who were also looking for positive trends in advertising revenues and number of users.

In both of those categories, the company came through - fourth quarter ad revenue was up 121 percent, to $220 million, and monthly average users up 30 percent, to 241 million, compared with the same quarter last year.

Chief Executive Officer Dick Costolo said the company was "doubling down" on measures to grow the company in 2014, including making the platform easier for new and existing members to use.

"We feel very well positioned for growth in 2014 and we will reach many more people," Costolo said during a conference call with analysts. "For users, we will continue to make the product easier to use. We've only scratched the surface of what we believe Twitter will become."

Twitter's quarterly net loss included $406 million for restricted stock units granted to employees that went on the books when the company went public. The company is also spending lots of cash to increase its workforce, now 2,700 employees worldwide.

Revenues, however, are growing nicely. For the quarter, sales increased to $242.67 million, compared with $112.25 million for the same period a year before.

For the full year, Twitter posted a net loss of $645.3 million on revenue of $664.9 million. The company also projected first-quarter 2014 revenue will range from $230 million to $240 million.

Analysts had expected a loss of 2 cents per share on revenue of $218.1 million. Twitter stock closed at $65.97 per share, down 35 cents per share on the NYSE.

The company's earnings report is one gauge of the company's financial health, but James Gellert, CEO of the research firm Rapid Ratings of New York, said it was important to remember Twitter is still a young company with much more to prove over time.

"That's why this earnings report is of interest and is important, but in the long run, it's going to be one the least important ones they'll ever have," Gellert said. "We need to see how they're able to sustain themselves over time."

'Very high risk'

RapidRatings employs a financial health rating of public companies based on a scale of 0-100, with 100 being the strongest. It rates Twitter as a "very high risk" stock and just downgraded Twitter slightly from a 17 to a 16.

While Twitter has made the hashtag a pop culture icon and turned a 140-character text-messaging system into an important source of breaking news, financial analysts still question whether the company can cash in big by becoming more popular among mainstream audiences.

By comparison, Twitter still significantly trails social networking giant Facebook, which has 1.23 billion monthly active members worldwide. Moreover, while most of Twitter's members live outside the U.S., only 27 percent of revenue comes from those international users.

User confusion

New members, for example, have complained they don't understand how Twitter works even when they sign on.

Costolo acknowledged the gap between awareness of Twitter and user engagement but said the company has seen gains from changes such as putting the direct-messaging button more "front and center."

"It will be a combination of changes over the course the year that we believe will start to change the slope of the growth curve," Costolo said.

Earlier in the day, Twitter released the results of a survey the company commissioned to show the relationship between tweets and television. To be sure, the results can be taken with a grain of salt since Twitter is trying to generate more TV-related advertising.

But it is clear TV viewers tweet while they watch.

The recent Super Bowl drew over 24.9 million tweets about the game and halftime. And last season's finale of "Pretty Little Liars" attracted 1.9 million tweets, according to Nielsen's SocialGuide.

"It's clear that TV and Twitter are better together," Anjali Midha, Twitter's head of research, wrote on a company blog.

The study found that hashtags in TV ads drove "positive brand conversation" and that Twitter kept viewers tuned in to commercials and made them more effective.

Mixed bag

Key figures from Twitter's first public earnings report:

-- Monthly average users: 241 million (from 230 million at the end of the third quarter) Employees: 2,700